New study: Islam 'doesn't' slow economies

Is Islam a drag on economic growth? Economists have debated the impact of religion on economic performance for many years. A long line of scholars has blamed the relative poverty of Muslims today on their religious beliefs.

But economist Marcus Noland maintains that this long-standing view is wrong.

"There is nothing inherent about these [Islamic] societies that they have to perform poorly," says the economist with the Institute for International Economics in Washington. "If anything, Islam promotes growth.... There may be undue pessimism about the prospects of these countries."

The question has become especially relevant now that the United States has taken charge of Iraq and is spending tens of billions of dollars to reconstruct that war-torn, dictator-damaged nation. The Bush administration must hope Mr. Noland is right.

His thesis has many critics. Oddly, Noland's recently published paper, "Religion, Culture, and Economic Performance," has become something of a minor hit on the Internet. Web surfers have picked up the report and filled Noland's Internet mailbox with responses. Many of them are critical, some couched in religious terms. Some Hindus in India, for instance, don't have much good to say about Muslims. Sometimes the responses boiled down to "My God is greater than your God," Nolan says.

Some economists are also skeptical - and for more analytical reasons.

In general, Christianity and other major religions support "good" economic attitudes that contribute to higher per capita income and growth, according to a National Bureau of Economic Research paper published last year by three economists. But Muslims tend to be "antimarket" and negatively associated "with attitudes that are conducive to growth," the study concluded.

Economists note, for example, that Islamic teaching prohibits the collection of interest, sets strict rules on inheritances, and restricts women in the roles they can play in some areas.

World Bank economists have long noted that the education of females stands as a key indicator of economic progress in developing nations. Countries with higher levels of literacy and numeracy among girls tend to advance faster.

But that knowledge hasn't changed long-held traditions in several Islamic societies. Just last week at Afghanistan's constitutional convention, or loya jirga, the 100 or so women delegates were disappointed when no female deputies were elected.

The chairman, Sebaghatullah Mojadeddi, told the women not to put themselves on a level with men, since even God has not given them equal rights, noted a report from Kabul.

In this regard, Iraqi society may be better off because it generally treats and educates women better than does Afghanistan.

Noland's analysis, however, finds that it is something other than religion - maybe political instability or other aspects of government - that has braked development in Islamic nations.

Looking at history, he notes that the Islamic world was more highly developed than Western Europe in the 10th century, for example. And the West really didn't catch up until the 17th or 18th century and then moved ahead.

"This means that Islam is consistent with long periods of both relatively rapid and slow growth," he writes.

Nor can Islamic nations blame Western imperialism for their slow growth, since Islam was developing more slowly than the West during the period of Islamic conquest and geographical expansion in Europe during the Middle Ages.

To reach his conclusion that Islamic views are not economically damaging, Noland compares economic performance of Islamic nations with other nations from 1950 to 1972. That period was prior to the quadrupling of oil prices that gave several Middle East nations a huge boost. Noland also compared regions or populations within religiously divided nations.

The results, he finds, "provide no support for the notion that Islam is a drag on growth."

In India, for instance, with the world's third-largest Muslim population, he finds no evidence that the level of the Muslim population in the various states impacts economic growth if other economic factors are taken into consideration. These include, for example, population density, road density, percentage of villages with electricity, annual rainfall, and so on. Neither has Islam had an economic impact in Malaysia, divided by three ethnic groups (indigenous Malays, Chinese, and Indians), and Ghana, with a significant Muslim population.

If Islam is not an economic impediment, then the Bush administration can concentrate on other economic issues. Aside from security problems, Iraq's biggest obstacle is its huge foreign debts. These amount to about $130 billion, reckons the Council on Foreign Relations. Without debt reduction, much of Iraq's oil export revenues would go merely to servicing that debt rather than development.

That's why the administration has been seeking a 90 percent write-off - and why it cheered when Bush confidant James Baker III got a pledge in Paris last Tuesday from France and Germany for a "substantial reduction" in debt.

Should the Bush administration and its allies manage to turn Iraq into a prosperous democracy, it will certainly be seen as evidence that Islam need not hold back economic growth. But it won't end the debate on the role of religion in economic development.